The Big Bet on Corcept

Tomorrow is the big day for Corcept Therapeutics (NAS: CORT) ; the Food and Drug Administration is scheduled to make a decision about the company's Cushing's syndrome treatment, Korlym, which used to go by the name Corlux. Investors are rushing in today, betting on an approval, sending shares up as high as 22%.

Cushing's syndrome is caused by high levels of a hormone called cortisol produced by some tumors, which can cause multiple symptoms including high blood sugar and high blood pressure. The drug passed its phase 3 clinical trial with 60% of glucose intolerant patients responding to the medication and 43% of patients with high blood pressure responding.

The question is whether the FDA cares. The agency only gave Korlym a standard 10-month review rather than a six-month priority review. Considering there are no other options for Cushing's syndrome patients -- Novartis (NYS: NVS) has one in the works, though -- it seems the FDA is saying that the symptoms of Cushing's syndrome aren't that bad.

Assuming that's what the FDA is thinking -- and it's not just that all the reviewers decided to go on vacation rather than helping patients get a medication quicker -- then the side effects for the drug become a bigger concern. Patients in the clinical trial had a laundry list of adverse events, including six patients out of 50 that had serious adverse events that were considered probably related to Korlym treatment.

Handicapping whether Korlym gets approved is further complicated by the lack of an advisory panel meeting scheduled by the FDA. Vertex Pharmaceuticals' (NAS: VRTX) Kalydeco and Amylin Pharmaceuticals' (NAS: AMLN) Bydureon were recently approved without an advisory panel for their current review cycle, but those were straightforward approvals. I wouldn't classify Korlym as straightforward, which makes you wonder why the FDA wouldn't ask for help from a committee of outside experts. Could it be that it's already made up its mind to reject the drug?

For me, all the signs point to Corcept getting sent back to the drawing board, but this is like reading signs in a dense fog. I could easily be misinterpreting the FDA's signals, so I wouldn't recommend shorting the stock, either. Unless you're a gambler, staying away from either side of the Corcept bet is likely the best move.

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